February 15th 2024
When I was a kid growing up at home, I was always looking for ways to supplement my allowance. At first snowfall, I was up and out with a list of two or three homes with walks to shovel on my way to elementary school. In summer I would pick dew worms and sell them along the highway up in cottage country. I had a paper route. It was a Toronto based newspaper and so I had to cycle all over St. Catharines to service a few customers. But it was income.
I kept all my earnings in a plastic piggy bank in my room. And from time to time, I would dump the contents out and count it.
I remember when it finally hit $100 (that would be like $1,000 today). I was sort of excited about my accomplishments 
and told my parents about it. Big mistake. From that time on, if ever I went to my parents with a request to buy me something, the response was always ‘You have your own money. Use it.’ It’s been said that this country penalizes thrift. Well, in this particular case, so do parents.
But the fact of the matter is that as important as savings is, there was absolutely nothing magic about that pig. What I put in was exactly what I got back out.
A few years ago, I was chatting with a couple of young kids and wanted to try to teach them about investing and passive income. I explained the idea of ‘magic pigs’ to them. These were ‘piggy banks’ that grew money over and above anything you might put in. To illustrate, I took them to a rental and showed them a coin operated washer and dryer. ‘These’ I told them ‘are magic pigs’. Then I opened up the coin slide and showed them the money. Money I never put in. I emptied the bins. Then a couple of months later I took them back, and the bins were again filled with coins. Magic! Magic Pigs. ‘In life you’ll want to have some magic pigs’ I explained.
By the way, if you have multi-family buildings in your portfolio, duplexes perhaps, or triplexes, you should install coin operated washers and dryers. They are convenient for the tenants, and the change will add up. My wife collects these coins and puts them into a bank account for holiday money.
On a larger scale, when you think about it, investment properties are also magic pigs. Every month the tenants make deposits, sometimes directly into your account. Of course, there are draws on these funds: heat, hydro, taxes, mortgage interest. But as long as the inflow is greater than the outflow that ‘pig’ is getting fatter without you scrimping and saving.
Now there are a lot of ‘magic pigs’ in life you can invest in: the stock market, bank interest from accounts, gold. Anything that grows without added input from you. But I’m convinced, when it comes to passive income, you won’t do better than real estate. A great magic pig. And on a much smaller scale, so are coin operated laundry machines on site. And they can be also used as very valuable object lessons for your kids along the way.